5 Mistakes Every First-Time Homebuyer Must Avoid

Buying your first home is both a nerve-wracking and fulfilling experience. The homebuying process is riddled with so many steps and requirements that it could be stressful for those who fear making mistakes. As a first-time homebuyer in Canberra, your focus should be on acquiring property that ensures value for your money. Your first foray into property purchasing may not be as easy as expected, but the good news is you do not have to go through it on your own.

We note down 5 crucial mistakes you need to avoid during your first property hunt plus some helpful tips:

Finding a property before getting a mortgage pre-approval

Many first-time buyers look for potential homes first before they approach any mortgage firm. At present, buyer demand for affordable homes far exceeds the number of available supply, resulting in a tight housing inventory. Competition is rife and sellers are not likely to take your offer seriously unless you prove your financial capacity (e.g. cash downpayment) or have already been preapproved for a mortgage. In a volatile market setting, only a few sellers are willing to take a risk on first-time buyers who might not be able to pay. There's no reason especially when they have multiple options on the table.

As per expert advice, the correct step should be to get pre-approved for a mortgage first before exploring new homes. Pre-approval is a mark of a serious buyer whose credit and finances are in order. You're likely to succeed in your house-hunting with this method and avoid getting sidelined by sellers.

Not exhausting your lending options

Do not settle for the first lender or bank that looked your way just because you're a first-time buyer. This is a crucial mistake. Sift through every option and compare offers before deciding. All the more reason if you're working around a tight budget. You could be leaving money on the table by not exhausting your options.

Consider at least three mortgage firms. Compare their deals, rate quotes, fees and loan terms. How does each firm treat clients? Are they responsive enough? Your goal here is to get the lowest rates possible. You could use a bank's mortgage rate quotes as a basis for comparison.

Buying beyond your means

Home staging easily attracts offers from buyers. Some sellers may latch on to the hype and increase the price until someone makes the offer that they want. No matter how badly you long for that home, this has always been the rule of thumb for buyers, be they experienced or a neophyte: do not overextend yourself. Home prices are always increasing and if you don't follow your budget, you'll be getting the short end of the stick.

A foreclosed home is the last thing you'd want during these challenging times. Your budget includes the maximum loan amount you qualified for plus your regular income and savings (if any). If you have trouble balancing what you want with what is available, ask your buyer's agent or broker for advice. They will chart a better course on your behalf and may even help you buy property off the market.

Rushing the process

It takes patience to buy a home. The process itself can be complex and long. Just getting pre-approved for a mortgage alone can be taxing. Failing to plan ahead is a big mistake.

Instead of diving into it head-long, you have to look at your home as an investment. All property investments require time and careful planning, lest you end up losing more than what you put out. Save enough for your down payment and closing costs months or years before setting your purchasing plan into motion. Pay debts, fix your credit score and organise your credit reports where necessary. This will help you secure favourable loan terms and, eventually, obtain a property that matches your budget and preferences.

Overlooking hidden homeownership costs

Commence the homebuying process only after you have a good grasp of your finances. Do not wait for your monthly principal or interest to catch you off guard with an amount you did not expect. As someone new to homeownership, take all potential expenses into account and set aside a proper budget. You'll encounter more difficulties down the line if you just wing it. Will you be getting home insurance and mortgage insurance? How about your property taxes, maintenance and repair fees and other utilities?

In the event you have already taken everything into account but doubt the accuracy of your calculations, approach an expert. It could be your lender, buyer's agent or a real estate professional who has experience crunching numbers. With their help, you'd be able to come up with a more accurate estimate.

Make Your First Property Purchase Worthwhile

Avoid the crucial mistakes listed above and you'll have less problems to deal with during the homebuying process. Plan ahead, do the groundwork, compare rate quotes, stick to your budget and anticipate costs. And if you're having a hard time balancing your personal responsibilities with the demands of first-time home buying, you have the option to work with independent buyers representatives in Canberra, who can take the load off your shoulder. With their guidance and assistance, you'll have an easier time completing requirements and finally securing your dream home.